BSTDB reaches 5th anniversary

The Black Sea Bank for Trade and Development (BSBTD), the only international financial organization based in Greece (Thessaloniki), has disbursed more than $765 million to its member states since it was set up five years ago. The bank was founded in 1997 as a multilateral development bank (MDB) with the mandate to promote economic development and regional cooperation among the member states of the Black Sea Economic Cooperation (BSEC), an intergovernmental organization launched in 1992. The members of BSTDB are Greece, Bulgaria, Romania, Turkey, Russia, Ukraine, Albania, Armenia, Azerbaijan, Georgia and Moldova. BSBTD specializes in project finance, which accounts for 76 percent of its loan portfolio, and trade finance (21 percent) to private and public enterprises of its member states. The remainder of its portfolio comprises financial guarantees, equity investments and special services, such as leasing. According to a bank statement released on its fifth anniversary, financing projects in manufacturing, energy, transport, telecommunications, as well as small and medium-size enterprises (SMEs) are its priority sectors. Energy and manufacturing account for over 60 percent of approved projects. The loans to SMEs are granted through a network of selected banks. BSTDB also favors cross-border projects. BSBTD board members argue that the positive results of the bank’s activity are augmented by the joint financing of enterprises with other international financial organizations and regional banks. BSBTD’s activity has indirect benefits throughout the region, either through the strengthening of inter-state cooperation or the creation of new jobs. Last March, international credit rating agency Moody’s Investors Service assigned a Baa2 long-term issuer rating and a Prime-2 short-term issuer rating to BSTDB with a stable outlook. Moody’s pointed out that the BSTDB is a well-run institution, staffed with qualified professionals knowledgeable of their area. «Its internal guidelines are prudent and consistent with best practices for an MDB, its asset quality good, and its liquidity comfortable. The bank has posted net losses from 2001 and expects to do so until 2006 – but this is mitigated by the bank’s asset quality and its position as a start-up institution,» it said. The ratings also considered the factor of political turbulence of the Black Sea region. Only two, Greece (A1) and Russia (Baa3), were rated investment grade. However, over time this may improve as more countries become involved with the EU integration process, Moody’s said. BSTDB enjoys creditor status, which eliminates transfer risk in the event of an external payments moratorium in a member state, regardless of whether a loan is to a public entity or private company. Although profit maximization does not govern its activities, the bank’s lending is priced on commercial terms. Greece, Russia, Turkey, Romania, Bulgaria and Ukraine account for 90 percent of its capital base. With a view to attracting capital and investors to the region, the bank recently established the post of observer and is expected to invite other international organizations and governments with an interest in the region to apply for observer status. «The bank is now recognized by many international organizations and financial institutions as a bridge for expanding their interests in the region. The European Union, the World Bank, the European Bank for Reconstruction and Development (EBRD) and large credit institutions from Spain, Japan and Scandinavia continuously express their interest in cooperation with BSTDB,» said a bank statement. EBRD is BSTDB’s most important partner, while others include the International Finance Corporation (IFC), banking group KfW, and Japan Bank for International Cooperation (JBIC).

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